Get your finances in order during 2022 by dedicating just a few hours each month for the first part of the year! Start the new year by setting your goals and working this timeline to end the year with a more organized financial life.
January 2022 - Set Goals and Create a Plan
A new year is a perfect time to set new financial goals. It’s essential to create clear goals with actionable steps for the short-term (next year), mid-term (next five years), and long-term (over ten years or more).
Writing these goals down is something many procrastinate doing, but it can be highly beneficial when mapping out goals in their respective time frames. The best way to start is by looking at existing spending habits and how they can be realigned to help you meet your goals and develop a doable plan. Start assessing your present situation by looking at bank and credit card statements from the last few months of 2021 and analyze how much money you held onto and spent. From there, cut out anything unnecessary or seasonal expenditures to determine your tighter but still realistic budget for the new year. Continue recording your upcoming statements for the next few months in a similar way to keep track of your progress in this stage.
February 2022 - Invest in Your Plan
With goals set and plans created, February is the time to start investing in your plans so you can meet your goals. This will look different for many, but some common ways to start investing in your financial future are building up your savings, open a retirement savings account, open multiple savings accounts to meet financial goals, or start investing.
One of the most common personal financial goals is to build a substantial personal savings. The easiest way to do so is open a high rate savings or Money Market account that offers higher rates than traditional savings accounts with no service fees if a minimum balance is maintained. This makes these accounts an excellent option for anyone having money sitting aside and waiting to grow.
Many already have their personal (non-financial) goals set for the new year, such as getting a new car, moving to a new home, or taking care of last year’s debt. This is the time to get ahead and start the application process for any consumer loans; you may need to make these goals a reality. With an existing budget and general knowledge of where you stand on possible monthly payments, this process will be more straightforward than you once thought.
March 2022 - Spring Cleaning for Finances
This is the time of year to not only get your physical house in order but your financial house as well. Get started by reviewing your credit score, whether it needs improvement, and how much debt you have against it. Then with any debt, you may have been paying off, create a strategy for paying it down further by tackling your high-interest debt first. With this high-interest debt, the first action method should be to consolidate or combine your debts into one monthly payment at a more reasonable rate with a consumer loan.
Once you wrap up your spring-cleaning debt assessment, an annual net worth statement can be beneficial in tracking accomplishments year over year. This statement would include tracking assets such as investments, bank accounts, and things you own and liabilities such as loans, mortgages, and any other owed debt.
April 2022 - Plan for the Good and the Bad
With much of the work behind you, now it’s time to prepare for the good or the bad that may arise by creating an emergency and/or a vacation savings fund.
Saving up towards an emergency fund is an essential safety net to prepare for home repairs, unexpected expenses, job loss, and anything in between that may arise. The recommended amount for an emergency fund is a three-to-six-month cash reserve into a classic savings account for easy access and minimal terms. The most important thing to remember about these funds is when the opportunity arises after an emergency; cash reserves should be replenished. Additionally, summer is just around the corner – making this the ideal time to start saving for your big summer vacation! If you’re not the vacation type, an opportunity fund is a great place to save for your other wishes and goals.
Ready to create financial success in 2022? Start following this timeline and reach out to Mechanics for any further financial planning and savings needs!